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Last night’s movement of Bitcoin was a God-send for most traders, many of whom managed to get good scalps. The price has done a 180 since, pumping from $9,600 to $11,400 in under 20 hours. At press time, the price of BTC was testing the $11,449 resistance and had failed to break it.
Like the many fortune-tellers who have their loyal customers, eager ‘chart-watchers’ have made their fair share of predictions – How will Bitcoin proceed in the future? To what height will the coin surge ? Unlike the soothsayers who watched the skies or read palms, traders use reliable signs such as the Elliot Wave analysis, while some refer to the previous price action of Bitcoin. However, the actual path that Bitcoin will take eludes most of them.
Bitcoin
Source: TradingView
The chart as seen above is BTC/USD and compares the bear run that started in 2013 and the eventual bull run seen in late 2015, with a 350 DMA [white line] having a standard deviation of 3. The interesting observation is that this moving average has been a strong resistance for the price, and it has failed to break out of this level 5 times during the 2017 bull run. Further, the price of Bitcoin, back in 2016, shot up to the 0.786 fib level, exhausting the momentum of bulls. Following this, there was a retracement to the 0.618 level and an eventual dip below the same.
Mark Twain said it best, “History doesn’t repeat itself, but it often rhymes.” The same is happening with Bitcoin’s price, as it has successfully hit the 0.786 fib level and retraced to the 0.618 level. The next leg of Bitcoin’s price is a slight pullback from the previous retracement, followed by a brief dip below the 0.618 level [$9,843].
If the same is to repeat again, there is a possibility that Bitcoin may dip anywhere between $9,700 and $8,000 levels. However, the current pullback can still test the previous highs present at $0.786 fib level i.e. $13,400.